Survey: Student loans have delayed wealth-building for Gen Z and millennial borrowers

Key takeaways

• Most American adults say that student loan debt has delayed other financial decisions.
• Nearly 6 in 10 degree holders say that college has benefited salary and career growth.
• Younger borrowers are most likely to feel regret over student loans.

Roughly 60 percent of U.S. adults who have held student loan debt have put off making important financial decisions due to that debt, according to a new Bankrate survey. For Gen Z and millennial borrowers alone, that number rises to 70 percent. Student loans have prevented these borrowers from saving for retirement or emergencies, buying a home or paying off other debt, like credit cards.

Despite this, a majority of U.S. adults with student loan debt say that their degree has unlocked career and salary opportunities that wouldn’t otherwise be possible, highlighting the complicated relationship that many Americans have with their student loan debt.

Most American adults say that student loan debt has delayed other financial decisions

Of the U.S. adults surveyed who currently hold or have previously held student loan debt for themselves, 59 percent say that they have delayed financial milestones due to their student debt. Emergency funds and retirement savings have taken the biggest hit, with 27 percent of respondents delaying saving for emergencies and 26 percent of respondents delaying saving for retirement.

Age also plays a large factor in financial priorities. Younger borrowers are more likely to stall important financial decisions than their older counterparts; 74 percent of Gen Z borrowers (age 18 to 25) and 68 percent of millennial borrowers (age 26 to 41) have delayed financial decisions, compared to 54 percent of Gen X borrowers (age 42 to 58) and 42 percent of baby boomers (age 58 to 76). Among younger generations, Gen Z respondents say that they’re most likely to delay buying or leasing a car, while millennials are most likely to put off bolstering their emergency fund and buying a house.

However, there are commonalities across age groups. In each generational category — with the exception of the silent generation (age 77-plus) — roughly 25 percent of respondents report delaying saving for retirement, saving for emergencies and paying off other debt.

However, Bankrate Chief Financial Analyst Greg McBride cautions borrowers against postponing other debt payments, especially credit card debt. “Debt repayment should prioritize high-cost credit card debt, especially relative to federal student loans, which carry many favorable provisions unavailable on other debt, such as deferment, income-based repayment or debt forgiveness in certain instances.”

Student debt keeps many borrowers from emergency and retirement savings

Nearly 6 in 10 degree holders say that college has been beneficial to salary and career growth

Despite most borrowers saying that their debt has held them back from making important financial decisions, 59 percent of degree holders say that their higher education opened up career opportunities and increased their earning potential. Only 17 percent say that higher education hasn’t had much of an effect, and 19 percent say that it has had no effect.

Even with the burden of student debt, McBride says that the benefits of a college degree could be worth it. “For many, it will result in greater ability to save in the long run,” he says.

Bureau of Labor Statistics data backs this up: For full-time workers at least 25 years old, median weekly earnings are $579 higher for those with a bachelor’s degree versus those with only a high school diploma.

Younger borrowers are most likely to feel regret over student loans

Gen Z and millennial borrowers are more likely than Gen X and baby boomer borrowers to look back on how they financed their college education with regrets. Just 66 percent of Gen Xers and 52 percent of baby boomers report that, in hindsight, they would do something differently in regard to their student loan debt. In contrast, 85 percent of Gen Z and 77 percent of millennials say that they would change some part of their education, with most reporting regret over not working, or working too little, while in school.

Many Gen Z and millennial students also say that they would get a degree in a different field, attend a cheaper school, apply for more scholarships or go to community college rather than a four-year university.

Regardless of age, only 10 percent of respondents say that they wouldn’t have gone to college with the benefit of hindsight.

Gen Z most likely to look back on higher education financial decisions with regret

How to manage your student loan debt

According to the Association of Public and Land-Grant Universities, the average student loan debt for borrowers who earn their bachelor’s degree at a public university is $25,921. For those who attend private universities, out-of-state schools or graduate degree programs, this number can be much higher, leaving borrowers to start their professional careers with thousands of dollars in student loan debt. However, there are several strategies borrowers can use to pay off their loans while also making other money moves.

For example, if you’re saving up for a home and you’re having trouble making your monthly federal student loan payments, the U.S. Department of Education offers income-driven repayment plans that base your monthly payments on income and family size. The reduced monthly payment may give you some wiggle room in your budget to put more aside each month for a down payment.

If you have private student loans, consider refinancing if you’re offered better terms and a lower interest rate. If you have a financial goal of bolstering your savings or emergency account, refinancing could allow you to fund those accounts faster by saving money on interest charges or choosing a longer repayment timeline to lower your monthly payment.

Another approach is to look into loan forgiveness through your job. Many employers offer student loan benefits as one way of competing for talent in the labor market. You may consider asking your current employer about such benefits, or research the various forgiveness programs that you may be eligible for based on your profession or place of employment.

The bottom line

Student loan debt is a necessary undertaking for many borrowers. College graduates earn much more over the course of their careers than their peers with less formal education. For many, loans make a degree program attainable. That said, student loan debt can delay other financial goals, like saving for retirement, purchasing real estate or tying the knot.  Putting these milestones off for financial reasons is increasingly the case for younger generations.

By balancing priorities and considering various repayment strategies, you may be able to repay your student loans while also achieving other goals. For more information about paying for college and affording college as an adult, explore Bankrate’s resources for students. Keeping a diversified approach can help you to moderate your student loan borrowing.

Methodology

Bankrate.com commissioned YouGov Plc to conduct the survey. All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 3,939 adults, among whom 1,442 have, or had, student loan debt for their own education. Fieldwork was undertaken on March 29 – April 1, 2022. The survey was carried out online and meets rigorous quality standards. It employed a non-probability-based sample using both quotas upfront during collection and then a weighting scheme on the back end designed and proven to provide nationally representative results.